HomeMy WebLinkAboutResolution - 2004-R0462 - Resolution Authorizing The Disbursement Of Electric Utility Funds - 09_28_2004Resolution No. 2004-R0462
September 28, 2004
Item No. 19
RESOLUTION
WHEREAS, the City's municipally owned electric utility, Lubbock Power &
Light, operates a centralized utility billing system that provides billing services for the
electric, water, sewer, solid waste and storm water drainage utilities commonly referred
to as the Banner Utility Billing System; and
WHEREAS, it is customary for the cost of a billing system to be shared by all
participating utilities; and
WHEREAS, the Director of Electric Utilities, the Assistant City Manager and the
Chief Accountant of the City of Lubbock have reviewed the cost allocation of the Banner
Utility Billing System and recommend that certain adjustments be made regarding the
cost allocation among the various utility funds being served by the Banner Utility Billing
System and as detailed in the memorandum attached to this resolution and incorporated
herein as though set forth fully herein; and
WHEREAS, the Electric Utility Board has been briefed on this issue and agrees
with the recommendation as outlined in the attached memorandum; NOW THEREFORE,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK:
THAT the City Manager of the City of Lubbock BE and is hereby authorized and
directed, in accordance to the attached memorandum, to transfer to the electric utility
fund, the following amounts from the respective utility funds:
Water: $589,266.00
Sewer: $601,412.00
Storm Water Drainage: $604,468.00
Solid Waste: $321,210.00
Total: $1,816,356.00
Passed by the City Council this 28th day of September , 2004.
ATTEST:
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Re ecca Garza, City Secretary
APPROVED AS TO CONTENT:
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Quincy White
Assistant City Manager
APPROVED AS TO FORM:
Matthew L. Wade
Natural Resources Attorney
Resolution No. 2004-RO462
September 28, 2004
Item No. 19
To: Lou Fox, City Manager
From: Quincy White, Assistant City Manager
CC: Lee Ann Dumbauld, CFO/Assistant City Manager
Thomas Adams, Deputy City Manager
Carroll McDonald, Director of LP&L
Date: 9/8/2004
Re: Utility Billing Cost Allocation
Per your request to develop new cost allocation percentages for the customer services, and field services
provided to the utility funds consisting of Electric, Water, Sewer, Stormwater, and Solid Waste. I am providing
you with my cost allocation recommendations.
The allocations assigned to Water, Sewer, Stormwater, and Solid Waste for customer services and field
services are based upon my discussions with Jeff Snyder, Chief Accountant and Damian Pantoya, LP&L
Accountant. Jeff has had several conversations with the supervisors in the aforementioned departments. I feel
that these splits provide a reasonable and systematic means of allocating the expenses of the utility billing
department as a whole.
The Customer Service Department is primarily responsible for billing and collecting user fees for all of the
utilities. This includes customer service contact (staffing the phones to assist customers), move-ins/outs
(dealing with customers changes in residences), printing and mailing all customer bills, receipting and posting
into the Banner System, and reviewing for billing abnormalities (Hi/Lo group). The electric and water meters
drive much of the workload as many of the calls received are due to meter reading questions. The remaining
portion of the workload is a function of maintaining the database in the Banner System for all of the customer
accounts. There are two locations staffed by this Department one at the main LP&L building on Broadway and
one off of Slide Avenue. The basis used to allocate costs for this Department uses a two -tiered method, a
portion for the number of accounts and a portion for the number of meters.
Customer Services:
Recommended
Maximus
Electric
31.29 %
29.76 %
Water
23.79
34.14
Sewer
16.72
13.39
Storm Water
11.82
11.42
Solid Waste
16.39
11.29
ITEM 1 9
September 8, 2004
The Field Services Department is primarily responsible for electric and water meters reading. In addition to the
monthly meter reading for electric and water billing this Department performs all re -reads of meters (generally
after a call has been placed to the Customer Service Department), reading the meters for move ins/outs, service -
turn on/offs as required, after hour collections (for the slow paying customers in order to turn back on the
services). This Department also monitors for unauthorized consumption of electric and water utilities,
performs collections efforts on dishonored checks and occasionally handles customer calls, and monitors for
water leaks. The electric and water meters drive a significant portion of the workload for this Department.
Therefore, the number of meters was used as the primary method of allocating expenses. The remaining
amount of the expense allocated is based upon the number of customers for each utility.
Field Services:
Recommended
Maximus
Electric
37.68 %
42.40 %
Water
36.05
57.51
Sewer
19.69
0.04
Storm Water
6.59
0.01
Solid Waste
0.00
0.04
Combined (Customer Service and FSeld Service):
Recommended
Maximus
Electric
33.66%
34.23%
Water
28.34
42.40
Sewer
17.82
8.67
Storm Water
9.88
7.39
Solid Waste
10.30
7.31
The above allocation percentages for Customer Services and Field Services are based on actual dollars spent in
fiscal year 2003. The percentages are applicable to the 2005 fiscal year. The allocation percentages are to be
recalculated every year using the same allocation basis for each cost center. The allocation basis will be
applied to the prior completed fiscal year for the coming fiscal year. Since the allocation basis relies on the
number . of meters, accounts and FTE's, new allocation percentages will be calculated in August for the
upcoming fiscal year.
It is my opinion that only the electric utility requires a Promotion Department because this utility is the only
one with competition. No costs should be allocated from this department to the remaining utilities.
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C
Additional costs, which should be allocated, based upon a basis
department (Broadway Building) _ would be building insurance,
services. These costs associated with Slide Road site should be
Departments percentages noted above.
September 8, 2004
such as square footage occupied by each
utilities, building maintenance, custodial
allocated based on the Customer Service
There is another component of the operations of the LP&L which should be allocated. This is the
Administration Department, which includes LP&L upper -level management. I would recommend using full
time equivalent employees (FTE), as of August 31 of each year, for the utility as a whole as a reasonable basis
for allocation of these expenses. However, because the amount of this allocation is significant, I would further
recommend that an oversight committee be formed for the billing and collecting fimction. The committee
should have representatives from each of the utilities (senior management level). The committee
representatives should ensure that the various interests of the utilities and the City of Lubbock are considered.
The committee should review such items as the budgets, procedures and policies. This would provide for better
representation on operating decisions from all of the utilities and input as to how the budgets are allocated.
It is customary for the cost of a new billing system to be shared by all participating utilities. However, during
my review of the City's general ledger (specifically the capital project status report which details the agreed
upon funding sources) and discussions with individuals who were present when the system was purchased,
there appears to be agreements made in the past which would indicate that no further payment is necessary.
There is only one member of the original Banner Steering Committee who is still employed by the City. In the
interest of fairness, I am recommending that all of the utilities should contribute an equitable share of the
purchase price of the Banner System using the combined allocation in lump sums for each fund as follows:
Banner
System Cost
Sharing
Water
$589,266
Sewer
601,412
Storm Water
604,468
Solid Waste
321,210
Totals
$1,816,356
I recommend that this be the maximum total payment to LP&L for this system and no further interest and
principal payments be required. This additional payment may have an impact on the user fee rates charged to the
public for the affected utilities. Please do not hesitate to contact me if you additional questions.
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